Given the sanctions that various countries have imposed on Russia in response to its invasion of Ukraine, leading multinational corporations are keeping their distance from Russian companies, at least temporarily. In addition to inflationary pressures, supply chain issues, and forthcoming interest rate hikes, the decline of the Russian Ruble to record lows amid the chaos in the Russian economy and markets has been of growing concern to investors.
The U.S. stock market has been turbulent so far this year and is not expected to calm down in the near term. So, investors seeking safe bets to generate stable returns. Investor interest in high-quality stocks is evident in the Invesco S&P 500 Quality ETF’s (SPHQ) 1.1% returns over the past month, compared to the SPDR S&P 500 Trust ETF’s (SPY) 0.8% returns.
We think the current market uncertainty provides an excellent opportunity to buy prominent mega-cap stocks Pfizer Inc. (PFE), Cisco Systems, Inc. (CSCO), Abbott Laboratories (ABT), Oracle Corporation (ORCL), and Accenture plc (ACN), each of which possesses solid fundamentals. Given their higher profitability, these stocks have the potential to survive current market fluctuations and deliver stable returns.
Pfizer Inc. (PFE)
With a $268.35 billion market capitalization, New York City-based PFE is a pharmaceutical company that offers medicines, vaccines, medical devices, and consumer healthcare products worldwide for oncology, inflammation, cardiovascular, and other therapeutic areas. It serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On Feb.25, 2022, the U.S. Food and Drug Administration (FDA) accepted for review the Prior Approval Supplement (PAS) to the Biologics License Application (BLA) for PFE’s ABRILADA as an interchangeable biosimilar to Humira. FDA’s approval should help PFE gain broad access to essential, high-quality, and cost-effective treatment options for patients living with certain chronic inflammatory conditions.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, PFE’s revenues increased 1049% year-over-year to $23.84 billion. The company’s income from continuing operations came in at $3.58 billion for the quarter, indicating a 464.4% year-over-year improvement. PFE’s non-GAAP net income was $6.24 billion, representing a 156.3% rise from the prior-year period. Its non-GAAP EPS increased 151.2% year-over-year to $1.08.
Analysts expect PFE’s EPS to improve 67.6% year-over-year to $7.41 for its fiscal year 2022, ending Dec.31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $111.05 billion consensus revenue estimate for the same fiscal year represents a 36.6% rise from the prior-year period. The company’s EPS is expected to grow at a 6.7% rate per annum over the next five years.
The stock has declined 19.2% year-to-date and closed Friday’s trading session at $47.72. PFE’s levered free cash flow margin, ROE, and ROA were 38%, 31.9%, and 12.1%, respectively, in the trailing 12 months.
PFE’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Value, and a B grade for Growth, Sentiment, and Quality. Click here to see the additional ratings for PFE’s Momentum and Stability.
PFE is ranked #12 of 179 stocks in the Medical - Pharmaceuticals industry.
Click here to checkout our Healthcare Sector Report for 2022
Cisco Systems, Inc. (CSCO)
CSCO in San Jose, Calif., designs and manufactures Internet Protocol (IP) based networking products and services related to communications and information technology worldwide. The company sells its products and services directly and through systems integrators, service providers, resellers, and distributors. It has a $232.80 billion market capitalization.
On Feb. 28, 2022, CSCO announced advancements to its internet of things (IoT) portfolio that help its service provider customers offer a simpler way to manage LPWAN/4G/5G IoT connectivity for new and emerging use cases. Cisco IoT Control Center now fulfills industry needs for Mass IoT with a new simplified and secure connectivity management package purpose-built for lower complexity IoT devices. CSCO should witness higher demand from its platform in the coming years.
For its fiscal year 2022 second quarter, ended Jan. 29, 2022, CSCO’s total revenue increased 6.4% year-over-year to $12.72 billion. The company’s non-GAAP gross profit came in at $8.33 billion, indicating a 4% year-over-year improvement. Its non-GAAP operating income was $4.36 billion for the quarter, up 6.2% from the year-ago period. CSCO’s non-GAAP net income increased 5.5% year-over-year to $3.55 billion. Its non-GAAP EPS came in at $0.84, up 6.3% from the prior-year period. And as of Jan. 29, 2022, the company had $6.73 billion in cash and cash equivalents.
The $3.44 consensus EPS estimate for its fiscal year 2022, ending July 31, 2022, represents a 6.8% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to reach $52.85 billion for the same fiscal year, representing a 6.1% rise from the prior-year period. The company’s EPS is expected to grow at a 7.1% rate per annum over the next five years.
CSCO stock has declined 11.6% in price year-to-date and ended Friday’s trading session at $56.04. Its levered free cash flow margin, ROE, and ROA were 20.3%, 30.1%, and 12.5%, respectively, in the trailing 12 months.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Quality. Click here to see the additional ratings for CSCO (Momentum, Value, Growth, Stability, and Sentiment).
CSCO is ranked #5 of 55 stocks in the C-rated Technology - Communication/Networking industry.
Abbott Laboratories (ABT)
With a $215.87 billion market cap, ABT in Abbott Park. Ill., discovers, develops, and sells healthcare products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine. The company’s products are sold directly to wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers.
On Feb.21, 2022, the U.S. FDA approved an expanded indication for ABT’s CardioMEMS HF System to support the care of an additional 1.2 million U.S. patients living with heart failure. The sensor wirelessly transmits daily pressure readings to a patient's clinical team and provides an early warning system enabling them to protect against worsening heart failure. ABT should witness expanding market reach for this sensor in the coming months.
For its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, ABT’s net sales increased 7.2% year-over-year to $11.47 billion. The company’s non-GAAP gross profit came in at $6.62 billion, representing a 5.8% rise from the prior-year period.
ABT surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to grow at a 13.2% rate per annum over the next five years.
The stock has declined 13% in price year-to-date to close Friday’s trading session at $122.41. ABT’s levered free cash flow margin, ROE, and ROA were 17.8%, 20.5%, and 9.4%, respectively, in the trailing 12 months.
ABT’s POWR Ratings reflect its solid prospects. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B grade for Stability and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for ABT’s Momentum, Growth, and Value here.
ABT is ranked #3 of 167 stocks in the Medical - Devices & Equipment industry.
Click here to checkout our Healthcare Sector Report for 2022
Oracle Corporation (ORCL)
With a market capitalization of $203.89 billion, ORCL provides products and services that address all aspects of corporate IT environments, including application, platform, and infrastructure worldwide. The company operates through four segments—cloud services and license support; cloud license and on-premises license; hardware; and services. It markets and sells its solutions directly to businesses in various industries, government agencies, educational institutions, and indirect channels.
On Feb. 14, 2022, ORCL announced new logistics management capabilities within Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) to help organizations increase efficiency and value across their global supply chains. Large fluctuations in supply and demand and major disruptions to their distribution networks since the pandemic created major logistics-related challenges for organizations, raising logistics costs and impacting their relationships with customers. The updates to Oracle Fusion Cloud Transportation Management and Oracle Fusion Cloud Global Trade Management can help organizations reduce costs and risk, improve customer experience, and become more adaptable to business disruptions.
For its fiscal year 2022 second quarter, ended Nov. 30, 2021, ORCL’s total revenues increased 5.7% year-over-year to $10.36 billion. The company’s non-GAAP operating income came in at $4.86 billion, indicating a 5.8% rise from the prior-year period. While its non-GAAP net income increased 4.5% year-over-year to $3.38 billion, its non-GAAP EPS increased 14.2% to $1.21. As of Nov. 30, 2021, the company had $17.94 billion in cash and cash equivalents.
The $4.82 consensus EPS estimate for its fiscal year 2022, ending May 31, 2022, indicates a 3.2% rise from the year-ago period. Analysts expect the company’s revenue to reach $42.34 billion for the same fiscal year, representing a 4.6% rise from the year-ago period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s EPS is expected to grow at a 9.6% rate per annum over the next five years.
The stock has declined 12.5% in price year-to-date and ended Friday’s session at $76.35. ORCL’s levered free cash flow margin and ROA were 23.4% and 9.6%, respectively, in the trailing 12 months.
ORCL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for GSK (Growth, Stability, and Momentum).
ORCL is ranked #16 of 165 stocks in the Software - Application industry.
Click here to check out our Software Industry Report for 2022
Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides management and technology consulting services. The company operates through five business groups—Communications, Media, and Technology; Financial Services; Health and Public Service; Products; and Resources. It also provides managed security and cyber defense services (MSS). It has a $203.83 billion market capitalization.
On Feb.24, 2022, ACN announced the expansion of Droga5, a part of ACN’s leading digital agency network Accenture Interactive, into São Paulo, Brazil, in response to market and client demand for its creative, design, technology, commerce, data, and experience transformation capabilities, and to help clients further power their ability to deliver the best brand experiences. This expansion into the Brazilian market should help drive ACN’s sales in the coming months.
For its fiscal 2022 first quarter, ended Nov. 30, 2021, ACN’s revenues increased 27.2% year-over-year to $14.97 billion. The company’s operating income came in at $2.43 billion, representing a 28.8% year-over-year improvement. Its net income came in at $1.79 billion, up 19.4% from the prior-year period. And ACN’s adjusted EPS increased 28.1% year-over-year to $2.78. The company had cash and cash equivalents of $5.64 billion as of Nov. 30, 2021.
Analysts expect ACN’s EPS to improve 20% year-over-year to $9.36 for its fiscal year 2022, ending Aug. 31, 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. The $53.20 billion consensus revenue estimate for the same fiscal year represents an 18.7% rise from the prior-year period. The company’s EPS is expected to grow at an 11.4% rate per annum over the next five years.
The stock has declined 22.2% year-to-date and ended Friday’s trading session at $322.51. ACN’s levered free cash flow margin, ROE, and ROA were 11.8%, 32.4%, and 14.2%, respectively, in the trailing 12 months.
ACN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Quality. Click here to see the additional ratings for ACN (Value, Growth, Stability, Sentiment, and Momentum).
ACN is ranked #4 of 11 stocks in the A-rated Outsourcing - Tech Services industry.
PFE shares were trading at $46.70 per share on Monday afternoon, down $1.02 (-2.14%). Year-to-date, PFE has declined -20.31%, versus a -8.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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